Offering a lucrative option for deposit interest-hungry Turks, ING Turkey is launching an aggressive campaign that offers a temporary annual interest rate of 9.5 percent, the company announced at a press conference Friday.
ING Turkey will launch the first savings account in Turkey with no service fees and no minimum levels plus a high interest rate, said the deputy general manager of the Netherlands-based lender. Johan de Wit also said Turkey needs longer-term investments, as he spoke to journalists in Istanbul.
The new product is called the “Orange Account” and it will offer a record interest rate of 9.5 percent for at least the first 90 days of activation. Noting that the rate would be a “welcome promotion,” Wit said the rate is expected to decline to around 8.5 percent after three months.
The account has different characteristics from an actual interest-bearing deposit account, which makes up 68 percent of all bank accounts in Turkey. “The Orange Account is a simple product which has one fixed rate for all,” de Wit said. The account could even be opened with a phone call or Internet inquiry and two signatures from the customer, which could be sent to the bank through a courier service. “Customers will have a competitive rate without term deposit and instant access [to their cash] with no penalty for withdrawals,” de Wit said.
The savings problem
Talking to the Hürriyet Daily News & Economic Review on the sidelines of the event, de Wit noted that the savings rate of Turkey is low compared to many developed countries. “In order to cover its current account deficit that surges day by day, Turkey needs external funding,” said de Wit. According to the banker, more investments in savings accounts could open up the way to “domestic funding” of the gap. “We want to be the leading savings bank of Turkey with this product,” he said.
Turkey’s rising current account deficit, which has neared $45 billion for the 12 months through November, is generally associated with the economy’s “savings deficiency,” especially in the private sector. The aggregate private savings rate, at 11 percent of gross domestic product in 2010, is quite low by international standards. This ratio is not enough to generate the extra resources required by rising private investment.
“The average investment amount of an investor in Turkey stands around 15,000 Turkish Liras,” said Cenk Tabakoğlu, deputy general manager of consumer banking at ING Turkey. According to Tabakoğlu, 43 percent of investors prefer one-month deposit accounts, followed by 23 percent for terms of three-months. “This shows that most investors don’t make long-term investments,” he said, adding that with this new product, ING aims to encourage long-term savings.
